Essays on Management Accounting in Gulf Cooperation Council Countries Annotated Bibliography

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The paper "Management Accounting in Gulf Cooperation Council Countries" is a good example of a finance and accounting annotated bibliography. Accounting Based Management and Costing (ABM/C) have been gaining a lot of prominence from both the practitioners and researchers. ABC was developed to address the flaws that are associated with traditional cost accounting systems (Horngren, 1995). ABM is based on the ABC systems and enables the organisation to accomplish its missions with low use of organisation resources. It improves the value received by customers and the profit (Armstrong, 2002).

This paper is based on a critical analysis of three articles based on ABC and ABM. The first article is based on ABC in the healthcare industry, the second article is based on measuring & managing patient profitability and the last on the management accounting in Gulf Cooperation Council Countries. In conclusion, the relationship between the three articles is discussed. Article 1 Lawson, R. A. (2005). The use of activity-based costing in the healthcare industry: 1994 vs. 2004. Research in healthcare financial management, 10(1), 77. According to Lawson (2005), ABC has been developed with the aim of reducing the weakness associated with traditional absorption costing.

The method as evidenced in the article has the ability to assign costs to products and services according to what they consume. The paper makes a comparison between the results of a survey on activity-based costing with the results of a similar survey which was carried out ten years ago. From the paper, it is clear that the use of ABC/M has been on the decline in the healthcare organization with the healthcare sector remaining on average unsatisfied with the techniques.

According to Armstrong (2002), ABC/M is seen as difficult and has high costs. Moreover, it appears that the healthcare organisations have not succeeded in transiting from the ABC to ABM which had reduced the benefits to be attained. As asserted by the author, the application of the ABC is not an easy task. First, all activities are expected to be broken into discrete components. Moreover, the information required by the ABC may not be readily available and hence may have to be calculated for this purpose. As the author explains, the rise in costs of providing healthcare in the United States calls for identification of the causes of increase and ways to effectively utilize the healthcare resources available.

ABC is one of the tools which were examined for this purpose (Lawson, 2005). It is clear that with the familiarity of ABC/M on increase, there has been a decline in its use over the same period which is contrary to expectations. The low usage is despite the fact that ABC has a high value in comparison with other performance management methods.

This is supported by Armstrong (2002), who asserts that the method has the ability to lead to a better understanding of the organization operations, and gives vital costs information compared to the conventional tools. Despite this, ABC/M faces main challenges in its implementation which include costing, data processing concerns and absence of management commitment. In agreement with the author concludes, there is a need for organisations to focus on both costs and management. This can help organisations to attain substantial performance improvement. When an organisation focuses primarily on the costs, they fail to gain the full potential of activity-based management.

According to Lawson (2005) implementation of ABC/M has a lot of potential benefits provided an organization is ready to make changes necessary to achieve them. It is possible for the healthcare system to save costs and enhance customer satisfaction is ABC/M is implemented using the right methods.


Armstrong, P. (2002). The costs of activity-based management. Accounting, Organizations and Society, 27(1), 99-120.

HFMA. (2017). Measuring and Managing Patient Profitability. Retrieved 4 June 2017, from

Horngren, C. T. (1995). Management accounting: this century and beyond. Management Accounting Research, 6(3), 281-286.

Joshi, P. L., Bremser, W. G., Deshmukh, A., & Kumar, R. (2011). Diffusion of management accounting practices in gulf cooperation council countries. Accounting Perspectives, 10(1), 23-53.

Lawson, R. A. (2005). The use of activity based costing in the healthcare industry: 1994 vs. 2004. Research in healthcare financial management, 10(1), 77-94.

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